GSF Q1 2011: Improved results in a continued strong market

May 13, 2011 09:26

Operating profit before fair value adjustments was NOK 131.6m, against NOK 115.4m last year, reports with reference to Grieg Seafood.

 However, the harvested volume this year was substantially lower than last year's corresponding figure, showing that the Group has achieved a considerably improved margin. The improved performance was especially evident in Canada, but Rogaland also reported good profit growth, positively affected by the integration with Erfjord Stamfisk. The results from Scotland were temporarily weaker in the first quarter. 

The strong salmon market was maintained in the first quarter, characterised by a tight supply side and continued good demand. Because of this, seasonally record high prices were recorded in all markets. There was some price variation during the period and the harvest profile through the quarter therefore resulted in margin differences from region to region. 

The harvested volume totalled 11 879 tons in the first quarter, in line with previous volume guidance, and 34.4% down on last year's first quarter figure. 

The pre-tax profit was NOK 285.2m and cash flow from operations was NOK 216m in the first quarter of 2011. The equity ratio at 31 March 2001 stood at 51.3%.

The Group's operational EBIT before fair value adjustments of biomass was 11.08 NOK/kg (6.38 NOK/kg). Rogaland achieved an EBIT of 15.28 NOK/kg (9,07 NOK/kg), while Finnmark had an EBIT of 10.88 NOK/kg (8.97 NOK/kg). The EBIT in Shetland reached 6.58 NOK/kg (7.43 NOK/kg), while the EBIT in Canada improved significantly from 0.18 NOK7kg in 2010 to 12.55 NOK7kg in 2011. The newly established sales company in Norway, Ocean Quality AS, achieved an EBIT of NOK 2.9m (0.6%) in the first quarter of 2011.

Grieg Seafood acquired the remaining 51.3% of Erfjord Stamfisk AS in Norway in the first quarter for the amount of NOK 45m. Additionally, two companies were acquired in Shetland in April 2011 for the amount of NOK 19.5.


The salmon market has remained strong in 2011 with prices setting seasonal records. There is firm underlying demand in most salmon markets, both established and new, despite the high prices and a scarcity in supply. The demand for salmon is driven by changes in eating habits towards new eating trends such as sushi and a stronger focus on a healthy diet. Better distribution and market penetration in new and populous markets is another driving force which is expected to have great potential in the future.

The total supply growth in 2011 is expected to be appr. 7%. This is in line with the long-term historical demand and market growth, and gives reason to expect a continued strong salmon market in the current year. The market supply and demand balance in the salmon market is expected to be healthy in both short and long term, although lower prices should be expected in periods when the supply growth might overreach the demand growth.

At the turn of the year the cost of raw materials for fish feed increased, in some areas substantially, due to the weak fishing season in Peru. This led to an expectation of rising fish feed prices in 2011. The cost of key raw materials used in fish feed has now been greatly reduced and fish feed prices are expected to decline from the second half of 2011. 

Grieg Seafood expects a total harvest volume of 65 000 tons in 2011. This is in line with previous volume guidance, although with adjustments between the different regions. At present, the harvest volume in the second quarter is expected to total 16 000 tons, an increase from last year's second quarter figure of 13 700 tons. 

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